Crypto Markets Stumble Amid Fed Rate Uncertainty

Bitcoin Dips as Strong Jobs Report Puts Fed Rate Cuts in Doubt
Fed Pause or Hike? Bitcoin Feels the Heat of Hawkish Projections
Jobs Data Jolts Bitcoin: Will Fed Cuts Have to Wait?
Rate Cut Delays Slam Bitcoin and Markets: What’s Next for the Fed?

Bitcoin (BTC) began the week on a sour note, sliding below $93,000 during European trading hours—a 1.6% dip for the day, according to CoinDesk data. The cryptocurrency appeared poised to test the $92,000 support zone, a critical level that has held firm since late November.

The broader crypto market mirrored Bitcoin’s downturn, with the CoinDesk 20 Index down over 3%. Major altcoins like XRP, ADA, and DOGE experienced sharper losses.

Traditional markets also struggled, with S&P 500 futures dropping 0.3% after Friday’s 1.5% slump, pushing the index to its lowest point since early November. Meanwhile, the U.S. dollar index (DXY) neared 110, supported by rising Treasury yields.

The bearish sentiment followed a strong U.S. jobs report released on Friday. December’s nonfarm payrolls grew by 256,000, significantly surpassing expectations of 160,000. The unemployment rate ticked down to 4.1%, while average hourly earnings grew 0.3% month-over-month and 3.9% year-over-year, slightly below estimates.

In response, Goldman Sachs delayed its forecast for the Federal Reserve’s next rate cut from March to June, expecting only two cuts in 2025 and one more in 2026. Goldman’s economic research note stated, “The case for cutting rates to support the labor market has diminished significantly.”

The Fed’s rate-cutting cycle, which began in September with a 50-basis-point reduction, had fueled Bitcoin’s rally to record highs above $108,000 in late 2024. However, with stronger-than-expected economic data, the prospect of further rate cuts appears less certain.

While Goldman Sachs and JPMorgan foresee limited rate cuts, Bank of America (BofA) suggested that the Fed might extend its pause or even consider raising rates again. “We think the cutting cycle is over,” BofA analysts said, adding that the next move could be a hike.

ING economists echoed this sentiment, saying, “The market is right to anticipate an extended pause from the Fed.” They noted that upcoming core inflation data could solidify this outlook if it continues at 0.3% month-over-month, as seen in recent months.

The December Consumer Price Index (CPI) report, scheduled for release on Jan. 15, is now a critical focus for market participants. Rising inflation figures could amplify the Fed’s hawkish stance, further weighing on risk assets like Bitcoin.

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